The Full Court of the Federal Court of Australia has upheld the decision to award a “socially and individually vulnerable” paralegal, Ms Hill, who was sexually harassed by her law firm employer, Mr. Hughes, $170,000 in compensation. The compensation comprised of $120,000 in general damages and $50,000 in aggravated damages.

In this article, Andrew Tobin and John Hickey discuss the decision in Hughes trading as Beesley and Hughes Lawyers v Hill [2020] FCAFC 126, as it is the highest award of aggravated damages in a sexual harassment claim under the Sex Discrimination Act 1984 (Cth) (the Act).

In determining the compensation to be awarded, the Court referred to the decision of the Full Federal Court in Richardson v Oracle Corporation Australia Pty Ltd [2014] FCAFC 82. In that case (see our previous alert), on appeal, an initial award of $18,000 for non-financial loss was increased to $100,000, on the basis that previous awards for non-financial loss in sexual harassment cases — in the range between $12,000 to $20,000 — were no longer in line with current community standards.

Background

Ms Hill commenced working at Mr Hughes’ firm in northern NSW after separating from her husband. Ms Hill had just been admitted as a solicitor and wanted to remain living in the region to allow her children to have an ongoing relationship with their father. Mr Hughes was a senior legal practitioner and had promised Ms Hill that he would assist with her legal career development.

Shortly after commencing at the firm, Mr Hughes offered to represent Ms Hill in a mediation with her ex-husband. Ms Hill accepted his offer. As her lawyer, Mr Hughes gained access to privileged material including information about her relationship with her former husband, relationships with other men post-separation, apprehended violence orders she had taken out and her anxiety disorder.

The night prior to the mediation, Mr Hughes called Ms Hill and expressed his growing feelings of infatuation towards her. Ms Hill was upset at these comments but chose to ignore Mr Hughes.

Following the mediation, Ms Hill accompanied Mr Hughes on a work trip to Sydney, where the accommodation was separate bedrooms at his brother’s residence. On two occasions, Mr Hughes entered Ms Hill’s room in only his underwear and refused to leave unless she gave him a hug. Feeling personally and professionally compromised, Ms Hill reluctantly hugged Mr Hughes so that he would leave her room.

After returning from the work trip, Mr Hughes persisted with his predatory behaviour, regularly sending Ms Hill inappropriate emails, coercing hugs from her and threatening to end her employment unless she entered into a romantic relationship with him.

Although Ms Hill repeatedly requested for Mr Hughes’ behaviour to stop, he sent regular emails pleading that they start a romantic relationship. In one email, Mr Hughes stated that he was “very careful not to harass” Ms Hill and would defend any complaint made by her against him. In another email, he criticised Ms Hill’s work ethic but said he could “live with it” if they “were lovers”.

Mr Hughes eventually started a relationship with another employee at his firm and stopped sending inappropriate emails to Ms Hill. Following a disagreement in relation to work completed by Ms Hill, Mr Hughes used the confidential information obtained while acting as her legal representative to criticise Ms Hill’s professionalism. Mr Hughes then reduced Ms Hill’s working days to two days per week, claiming his assessment of her ability had been clouded by his earlier infatuation with her. Ms Hill subsequently resigned and commenced proceedings against Mr Hughes for sexual harassment.

Mr Hughes argued that the emails were sent after work hours and that the hugging occurred at the end of the workday. Mr Hughes also claimed that Ms Hill was “flirty and coquettish with him and wore alluring dresses and flicked her hair in a sensual manner” in asserting that she was interested in him.

First instance decision

The issue that the Federal Circuit Court of Australia had to determine was whether Mr Hughes’ conduct amounted to sexual harassment as defined in section 28A of the Act.

Referring to several of Mr Hughes’ inappropriate emails, Judge Vasta noted that by his own admission, Mr Hughes knew he had been sexually harassing Ms Hill and had attempted to bribe her into not making a complaint against him in exchange for allowing her to remain employed.

In response to Mr Hughes’ submission that Ms Hill had encouraged his actions by her work attire and her alleged flirtatious behaviour, Judge Vasta asserted:

"It is a mark of a bygone era where women, by their mere presence, were responsible for the reprehensible behaviour of men. The Sex Discrimination Act was enacted to help eliminate this sort of thinking."

In finding that the sexual advance was unwelcome, offensive, and humiliating, Judge Vasta ordered that Mr Hughes pay Ms Hill damages in the sum of $170,000, comprising $120,000 in general damages and $50,000 in aggravated damages.

The general damages were awarded for the pain, suffering and distress endured by Ms Hill at the hands of Mr Hughes. The Court accepted medical evidence that Ms Hill had suffered an adjustment disorder with mixed anxiety and depressed mood due to Mr Hughes’ conduct.

Having considered all circumstances of Mr Hughes’ offending, and referring to the decision in Oracle that “recalibrated the assessment of damages in sexual harassment cases”, his Honour considered that an award of $120,000 in general damages was appropriate.

Aggravated damages of $50,000 were awarded in light of Mr Hughes’ attempt to stop Ms Hill from making a complaint, and on the basis of the manner in which Mr Hughes had conducted himself during the trial. In relation to the latter, Mr Hughes inappropriately, and in breach of his professional obligations as a solicitor, used confidential information obtained while acting as Ms Hill’s legal representative to slander her during the proceeding.

Mr Hughes appealed the decision.

Appeal decision

In dismissing Mr Hughes’s appeal, the Full Court of the Federal Court of Australia referred to the decision in Oracle in confirming that the $120,000 in general damages was not manifestly excessive considering Mr Hughes’ conduct which had caused Ms Hill considerable stress, anxiety and unhappiness.

The Full Court also upheld the decision to award $50,000 in aggravated damages given Mr Hughes dishonourable attempts to deter Ms Hill from making a complaint against him, and the reprehensible way he conducted himself during the trial.

The Full Court rejected Mr Hughes’ submission that his conduct was of a sexual nature in a comparable sense to that of Mr Darcy and Ms Bennet in Jane Austin’s Pride and Prejudice. In rejecting the submission that Mr Hughes merely only wanted to be Ms Hill’s “platonic lover”, Justice Perram emphasised:

“The facts of this case are about as far from a Jane Austen novel as it is possible to be.”

Key lessons for employers

This judgment demonstrates the increasing tendency of Australian courts and tribunals following the Oracle decision to award and uphold significant sums of general and aggravated damages in sexual harassment cases.

Employers must ensure that their workplace policies and procedures reflect modern community standards when dealing with complaints of sexual harassment and discrimination and the forthcoming changes to Commonwealth sexual harassment legislation (see our previous alert).

It is vital that employers take all reasonable steps to ensure that sexual harassment is prevented in their workplaces, to mitigate the risk of being held vicariously liable for the inappropriate conduct of their employees and agents.